“Product/Market Fit Myths: Myth #1: Product market fit is always a discrete, big bang event; Myth #2: It’s patently obvious when you have product/market fit; Myth #3: Once you achieve product/market fit, you can’t lose it; and Myth #4: Once you have product/market fit, you don’t have to sweat the competition.”
– Ben Horowitz
Companies find product/market fit (PMF) when a product creates value that directly meets an unaddressed customer need. You know it when you see it—demand rapidly outpaces supply, and a $0 word-of-mouth campaign quickly becomes the only acquisition channel necessary. This is the holy grail for entrepreneurs and the primary obstacle standing between a capable management team and explosive growth. Of course, finding PMF isn’t easy, and it isn’t a one-time occurrence. Once found, it’s a constant process of adaptation that relies on extensive knowledge of the market and a keen eye on the competition.
Most companies conduct some market research, albeit informally; for example, by conducting customer satisfaction calls, or by checking out prices that competitors charge for similar products and services. Formalizing the market research process is essential to staying focused on target customers (i.e., keeping the business’ ideal buyer type up to date), discovering underserved customer needs, and staying ahead of competitors.
Finding a top market research analyst is no easy task. The ability to assess market research skills comes with experience in the field. This guide is aimed at helping you source such talent effectively.
Why Hire a Market Research Expert?
Below are some of the most common reasons for retaining a market research expert.
Understand your business’ place in the market and relation to your competitors.
Even a short-term engagement with a market research expert can yield valuable insights if you’re seeking to better understand your customer base, your competitors, and the market segmentation of spaces that you operate in.
The below is an exercise to uncover the key market research questions that will provide the greatest insight about your business in the shortest amount of time.
Q: A company engages you for a two-week assessment of their business relative to its competitors in the market. What types of questions would you be able to answer in this time frame that would have the greatest impact on the business’ bottom line?
Over the course of a short engagement, and depending on the resources available, a market research analyst should focus on the following questions:
- Who are your customers and what’s the best way of reaching them? A skilled market researcher may build out customer profiles, assess prospective business locations or distribution channels, and propose marketing strategies
- Which products and services do buyers need or want?
- What factors influence the buying decisions of your customers? Between factors such as price, convenience, and branding, among others, which factors carry the most weight? Which factors don’t matter as much?
- What prices should you set for your products and services, based on competitor pricing?
- Who are your business’ competitors? How do they operate, and what are their strengths and weaknesses?
If you believe your expert will need to conduct primary research, make sure to take the time required for customer outreach into account. Primary research can include surveys, focus groups, interviewing customers, and field trials or experiments. Secondary research, where experts leverage existing sources to derive insights on the market, is much more common, and more predictable from a timing point of view. Secondary research sources include economic forecasts, census data, and even Twitter.
Research a new market to inform your go-to-market strategy.
Market research experts can provide enormous value when a company is exploring new markets and products. A small cost now can save millions in R&D, marketing, and sales costs down the line if a new product is approved when the product/market fit isn’t there yet. To test a candidate’s ability to research a market for a new product, present them with a question such as the following:
Q: A company is exploring the development of a new line of products to complement their traditional product lines. You are tasked with conducting research that will ultimately be used to inform product development and the go-to-market strategy. How would you structure your research efforts to deliver the most important information needed to make this decision?
An expert market researcher will start with identifying the core competencies of this retail business, find an unfair advantage that exists, and explore new markets based off of that information. A research framework might look like the following:
Understand the company’s current market.
- What is the market the company currently operates in?
- What’s going on in the market? What are the industry trends?
- Here, the expert may leverage data sources such as Pitchbook, CB Insights, or annual reports.
- Who are the other players?
- Here, the expert may leverage personal knowledge of competitors from experience or, again, utilize secondary data sources.
- Platforms such as LinkedIn and Twitter can provide useful qualitative information about competitors. Trends such as growth in followers or frequency of posting can shed light into the state of their current fortunes.
Identify the company’s competitive advantage.
- What is this company good at? What products do they have that are doing well?
- What unique resources and advantages does the company have?
Build a market map to hone in on major market opportunities.
- What does the market map look like (a visual depiction of all verticals in the industry, with competitors divvied up by competitive strength)?
- Are there any gaps or opportunities for expansion within the market?
- How can the company’s competitive advantages serve these gaps?
Once opportunities are identified, test out the hypothesis of those opportunities—is there demand for the product?
- At this stage, the market research analyst may shift to primary research. They will directly ask select customers their thoughts on new products and services.
- An expert market researcher will be careful to avoid any confirmation bias at this stage. An external freelancer is especially helpful here as they are not incentivized to push survey participants in one direction.
Understand how your customers think.
When conducting primary research, businesses must be conscious of their customers’ time. As important as this information is to help the business make informed decisions, maintaining healthy customer relationships must also be a priority for purposes of retention and as a general best practice. Prior to reaching out to customers, an expert market research analyst will know exactly the questions that need asking and know the best approach for doing so.
Q: After a company has been losing market share to competitors for two quarters, it wants to investigate how a recent run of bad press has impacted its brand image. What approaches could you take to find out the impact?
This type of information could be gathered through primary research techniques including customer interviews and surveys of customers. In this case, surveys are likely one of the best techniques for assessing a shift in public opinion. There are a number of approaches to conducting surveys, each with specific pros and cons:
Through direct mail (i.e., hand out at the place of business or mail out with survey returned in person or via mail)
- Pros: Cost-effective; highly scalable
- Cons: Questionable effectiveness; follow-up reminders necessary
Over the telephone
- Pros: Cost-effective
- Cons: Can be difficult to reach participants, little appetite in the public for telephone interruptions; not as scalable
On the web or via email
- Pros: Allows participants to complete the survey on their own time with little effort, cost-effective; extremely scalable
- Cons: Low response rate
In person (e.g., personal interviews or focus groups)
- Pros: Can introduce follow-up questions or change the focus of the survey on the spot. Within a “mystery shopper” context, this can allow for more candid and honest assessments
- Cons: Can be difficult to recruit participants, expensive
Skills to Look Out For
Equally as important as these hard skills, a market research analyst must be a clear communicator, capable of synthesizing the takeaways of their research into an easily digestible report and focusing your attention on what matters. For the purposes of conducting primary research, a market research expert should be comfortable talking to every person touching the organization from executives to suppliers.
A skilled market research analyst will have proficiency in the entire MS Office suite (Excel, Word, PowerPoint) and statistical analysis programs. As an added bonus, a market research analyst may have proficiency in programing skills like SQL, R, and Python to really dig into the data. Sources in hand, a market research analyst will analyze the data using techniques such as a conjoint analysis, maximum difference scaling, and multivariate analysis.
Ensuring a Successful Engagement
Once you have found the ideal candidate, make sure to spend the time to adequately onboard the expert to increase the chances of a positive experience and a successful engagement.
Here are a few suggestions about how to make this transition go smoothly:
1. Establish realistic expectations.
Rather than ask the expert to explore every possible market that your company could enter in the next five years, limit the breadth of the question by market types (e.g., only markets related to the business’ current core operations) and time horizon (the next twelve months). Or, make a very ambitious ask, but understand that the analysis will necessarily be higher-level. You should understand an expert’s core areas of expertise to make sure they’re a fit for what type of analysis you have in mind. If you decide to hire through Toptal, the interview phase is a good time to determine this.
2. Ensure the market research expert has access and resources.
Make it clear to those within your organization that they should support the work of the market research expert to the best of their ability, where it makes sense. The expert may ask for sit-downs with your company’s decision-makers to understand core business challenges, or request a customer database in order to send out a survey. These client-facing activities should be done in coordination with your company’s sales or account management teams to avoid miscommunications.
3. Determine milestones right off the bat.
An expert market research analyst should provide you a roadmap for the first few weeks of the assignment. If they don’t, just ask! A clear roadmap helps ensure you start off with similar expectations about deliverables, expected results, and timing.
“Market matters most.”
– Marc Andreessen
Successful companies use information, not intuition, to drive their major business decisions. Expert market research helps mitigate risk in business decisions by enabling executives to more fully understand how customers perceive their products and services, and how customers compare their business to a competitor’s. Market research can play a part in forecasting inventory shifts and pricing changes as well as exploring new products and markets, all of which translate directly to the bottom line.